When a new business idea hits you, the impulse to jump headfirst into the world of entrepreneurship is exciting. But before you start selling products and services, it’s best to find out if your business idea is viable first with a little research. 

Once you research the market, develop a business plan to set yourself up for success. There’s also a small mountain of paperwork to complete for the legal requirements of running a business and protecting your intellectual property. 

Keep reading to find out what else should be on your business startup checklist.

Conduct Market Research

When most new business owners are asked who their target audience is, the answer is usually “everyone”. You’d love it if everyone in the world chose to buy from you, but it’s not realistic. 

Instead, you want to have a specific audience for your product to target your marketing. Find out who your potential customers are by asking yourself these key questions: 

• What age range are you targeting? 
• What’s their average income?
• Where do they hang out? (online and in-person)
• Where else are they shopping?

These are just a few questions to get you started with building out your ideal customer. Some people go as far as building out a full customer avatar to narrow down their marketing strategy. You won’t have to worry about that part until later though.

Once you know who your ideal customer is, it’s time to scope out the competition. 

It’s important to get a full picture of your advantages and disadvantages before leaping into entrepreneurship. This includes points like: 

• How many other businesses in the area are like yours? 
• What are their price points? 
• Who are their customers? 
• What are the potential obstacles to success? 
• How are you different from your competitors?

If you conduct market research and find a long list of businesses just like yours, don’t get discouraged. Focus on what makes your company and brand unique.

Write Out A Business Plan

If you fail to plan, you plan to fail. 

You’ve thought about your business plan. It’s all locked in your brain. You know the ins and outs and what needs to happen to bring in profit. So it’s fine, right?

What about your employees? What about your bookkeeper? What about potential lenders? They need to know what the plan is too. Put your pen to paper and write out a business plan with all the specifics. 

Your business plan is your roadmap to success. It lays out several major factors in making your business profitable: 

• The goals you want to reach
• Profit margins
• Your expenses
• Your mission statement
• Plans for funding
• Marketing plan
• Operations layout 

The idea of writing a multiple-page document filled with research, tables, and projections isn’t exactly exciting when you have so many other tasks to complete for your business. 

It doesn’t have to be complicated. A simple one-page business plan can help you identify critical gaps and lay the groundwork for a more in-depth report. You’ll want to make this a living document. As your business continues to grow and change, so should your business plan. 

Choose A Name For Your Business

Choosing a business name is one of the easier parts. As a best practice, you’ll want to have a list of business names available in case the name you choose is already being used. A quick Google search will show you if anyone is already using the name you want.

In many cases, you can also check your secretary of state website for any businesses registered under your preferred business name. Don’t just check with your state though. Check at the federal level too.

Apply For An EIN

Getting your EIN or employer identification number is important for a few different reasons. You’ll need this to open your business bank account, hire employees, apply for financing, business insurance, and other important benchmarks as a small business owner. 

It officially classifies your company as a business entity. Unlike other pricey steps in the process, this one is completely free. The Internal Revenue Service (IRS) delivers your EIN almost immediately after filling out their short application. 

From personal experience, you could be done in less than ten minutes depending on your business structure. Be sure to keep your EIN document safely filed away to use later. 

Set Up Your Business Structure

Your business structure will depend on several factors. It’s smart to consult an accountant or tax professional to consider the tax advantages of each business structure. It’s common for most small business owners to make this decision on their own though.

Here are some questions you can ask yourself to point you in the right direction:  

• Are you going at it alone or will you have a business partner? 
• Do you plan to hire employees? 
• Do you need to minimize liability?
• Are you planning to incorporate your business?

Based on your answers and business needs, you’ll be able to choose a business structure that works for you. You have a few options to choose from: 

• Sole proprietorship
• LLC
• General Partnership
• Corporation or S Corporation
• Nonprofit
• Cooperative

If the business is just you, a sole proprietorship is one of your first options. This is a great choice for smaller side hustles and low-risk businesses. Sole proprietorships keep it simple with uncomplicated paperwork and fast filing. 

The downside? Sole proprietors have unlimited liability for lawsuits filed against the business. Potential lawsuits can even target personal assets. LLCs provide limited liability in legal matters. 

General partnerships are similar to the unlimited liability structure of a sole proprietorship, but with the business being owned by two or more people. 

Corporations are more complex than the previous options. They’re also more expensive, but they offer tax breaks and liability protection. 

Your business needs will change over time. If you need to reconfigure, you can switch legal structures down the road to better serve your needs. 

Register Web Domains, Licenses, and Trademarks

The next step on your business checklist is to take care of the legal requirements to operate in your state and federally. Depending on the type of business you’re running, you might need to register for these licenses and permits:

• Sales tax permit
• Business license
• Logo or business name trademarks
• Website domain names
• Zoning permits

If you’re not sure about what you need, it helps to visit the secretary of state website for your state. The SBA provides free help for small business owners through small business development centers and other community organizations that promote economic development.

Find help in your area through the SBA’s website. It’s also smart to consult a lawyer for legal advice regarding the licenses and permits you’ll need as well as designing standard business contracts. 

Secure Financing (If Necessary)

Unless you’ve put away a large chunk of money before starting your business, you’ll likely have to secure financing. Those funds help you improve cash flow, expand your business, and keep things running. 

Financing comes in the form of business loans, credit cards, net-30 accounts, or small business grants. Most financing options require you to build business credit first. You could get a business grant, but there’s usually stiff competition and it takes at least a month to get a decision back. 

Before you apply for loans and credit cards, analyze your finances. Put together a budget of purchases you need to open the doors; equipment, payroll, supplies, rent, and anything else you need. 

Know how you’re going to use the funding and have a clear plan on how to repay it. 

The first step in finding out if you qualify for financing is knowing what your business credit scores are. Business credit bureaus are different from the consumer credit bureaus you’re used to. 

Dun & Bradstreet, Experian, Equifax, Paynet, and the SBFE are the main business credit bureaus. They each have their own business credit scoring system. 

If you’re interested in learning how to build your business credit scores, check out Credit Strong’s Business credit builder loan here. 

Pick a Location for Your Business and Check Zoning Regulations

Choosing a location for your business plays a big part in your success. When picking your store location, be mindful of a few key aspects: 

• Demographics
• Foot traffic
• Competition 
• Cost
• History
• Zoning regulations

These can determine who your clientele is, how much of a profit margin you’ll have, and whether or not you can sell certain products. For example, if the zoning regulations for the space you’re interested in don’t allow for alcohol sales, there’s no point in trying to open a bar. 

According to a 2020 survey from the national small business association, 38% of small businesses that transitioned to remote work during the pandemic plan to continue. Which makes opening a business purely online a great option for many new business owners. 

Opening a business online can expand your customer base and has a much lower overhead than a physical store. 

Get Federal and State Tax IDs

Don’t neglect to get tax IDs for your business. Register for both state and federal tax IDs through the IRS and your state’s website. Earlier we mentioned registering for an EIN. That’s part of it. You might also need a Tax Identification Number (TIN). 

These things allow you to meet your tax obligations whether it’s payroll taxes, state taxes, or income taxes. It’s important to be in compliance with taxes because it can get out of hand quickly.

Set Up A Business Bank Account

Setting up a business bank account keeps your business finances away from personal transactions. Sometimes it even acts as a way for lenders to qualify you for financing options.

Oftentimes, small business owners make the mistake of operating out of their personal bank account. This leads to mixed-up transactions and a mess to untangle when filing business taxes. If you run an LLC, it’s required for you to have a separate business bank account. 

Even if you’re doing business as a sole proprietor, your accountant will thank you for keeping your accounts orderly. 

Set Up A Bookkeeping System

It’s essential to track the expenses and income of your business. Bookkeeping doesn’t have to be a hassle though. If you have the funds, you can hire an accountant to keep things in line. 

There’s also accounting software that aims to make the process easy and informative. With software like Quickbooks or Freshbooks, you can take the DIY approach instead of hiring an accountant. These options can even take care of payroll and payroll taxes. 

Get Business Insurance 

You never expect bad things to happen when you first open your business. You have to be prepared either way. That’s what business insurance is for. In the event of a natural disaster, fire, flood, litigation, or even a workman’s comp case, insurance can help you cover costs. 

The amount of insurance you need will depend on your industry, the number of employees, the size of your business, and your assets and liabilities. It’s best to consult an insurance agent to get the business insurance that’s right for you. 

Market Your Business (Get a Logo, Social Media, Etc.)

Once you’ve done the hard work, you have one more step ahead of you – letting people know your business exists. In order to attract customers and make sales, they have to know what you’re selling. That’s where marketing comes into play. 

Depending on your ideal market, you could send out emails, hand out business cards, mail flyers, post signs, or even pay for an ad campaign. These days, most businesses do their marketing online through websites or on social media platforms. 

You’ll want to present a cohesive image for your company, so marketing includes putting together branding and a logo. Be sure to trademark your logo or get it registered as rights reserved. 

All in all, starting a business is a huge undertaking. To be successful, you have to do your research, make a plan, and get familiar with the finances. 

There’s a load of paperwork that comes with all of it. To make things easy on yourself, consult or hire people who specialize in the difficult stuff.

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